South Africa Corporate Tax Guide

Corporate Tax Rate

• Standard rate — 27%: Applies to all companies (including close corporations and co-operatives) for years of assessment ending on or after 31 March 2023 (reduced from 28%).
• The rate applies to taxable income calculated as gross income minus allowable deductions (including trading expenses, depreciation, and interest).
• Companies are required to pay provisional tax twice a year (six months into the tax year and at year-end), with a third top-up payment optional.

Small Business Corporation (SBC) Rates

Qualifying small business corporations with gross revenue below ZAR 20 million benefit from reduced tax rates on the first ZAR 550,000 of taxable income:

• 0% — on taxable income up to ZAR 91,250
• 7% — on taxable income from ZAR 91,251 to ZAR 365,000
• 21% — on taxable income from ZAR 365,001 to ZAR 550,000
• 27% — on taxable income exceeding ZAR 550,000

To qualify as an SBC, the company must have gross revenue under ZAR 20 million, all shareholders must be natural persons, and no shareholder may hold shares in another company (with certain exceptions).

Turnover Tax for Micro Businesses

Micro businesses with annual turnover below ZAR 1 million may elect the turnover tax regime instead of normal income tax:

• 0% — on turnover up to ZAR 335,000
• 1% — on turnover from ZAR 335,001 to ZAR 500,000
• 2% — on turnover from ZAR 500,001 to ZAR 750,000
• 3% — on turnover from ZAR 750,001 to ZAR 1,000,000

Turnover tax replaces normal income tax, VAT, provisional tax, and CGT for qualifying micro businesses. Once elected, the business must remain in the system for at least three years.

Capital Gains Tax for Companies

• Inclusion rate — 80%: 80% of the capital gain on disposal of an asset is included in taxable income.
• Effective maximum rate — 21.6%: 80% inclusion × 27% corporate rate = 21.6% effective maximum CGT rate.
• The annual exclusion does not apply to companies. Companies must keep a comprehensive asset register to track base cost for CGT purposes.

Dividends Tax

• Dividends Withholding Tax (DWT) — 20%: Companies must withhold 20% on dividends paid to shareholders. The company is responsible for withholding and paying the tax to SARS.
• Dividends received by a South African resident company from another South African resident company are generally exempt from income tax (the dividend exemption).
• Foreign dividends received by companies may qualify for exemption under section 10B or be subject to tax at the corporate rate.